Cause and Impact of Brexit on Business and Economy

Running head: CAUSES AND IMPACT OF BRIXIT ON BUSINESS AND ECONOMY
Cause and Impact of Brexit on business and economy
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1CAUSES AND IMPACT OF BRIXIT ON BUSINESS AND ECONOMY
The term economic integration refers to the amalgamation of various economic policies
between two or more countries (Balassa2013). This unification is achieved by the process of
partial or full removal of tariffs on trade before the process of integration. When economic
integration takes place then the goods are sold at a comparatively lower price. This is so
because of the fact that the goal of such economic integration is to increase the welfare of the
consumers while increasing the sales as well as the productivity. The major elements of
international trade integration can be described in seven stages. These are preferential trading
area, common market, customs union, free trade area, monetary and economic union,
economic union and complete economic integration.
The complete economic integration is the highest form of unification that can occur
between the states. The European Union is an economic and political union that enabled free
trade of goods and services within Europe.
Brexit means “British exit”. It refers to the decision of the United Kingdom (UK) to make
an exit from the European Union (EU). The decision was taken by the United Kingdom on
June 26, 2016. The decision was taken based on the poll in which the supporters of Brexit
won by a majority of 53.4 percent (Curry 2016). As announced by Prime Minister Theresa
May, the United Kingdom government has made up their mind that they would not involve in
the European Union. In the following section of the report an analysis has been conducted
regarding the drivers of Brexit that is whether the reasons are political or cultural. Further, the
business and economic impacts of Brexit on the United Kingdom economy has been
discussed in details in the report.
Several cultural, economic as well as political reasons are associated with Brexit.
Cultural factors that might have influenced the voting pattern are the working environment of
the employees (Arnorsson and Zoega2018). The social environment of the workers plays a

2CAUSES AND IMPACT OF BRIXIT ON BUSINESS AND ECONOMY
key role in such voting patterns. Workers get along well in those places where they have like-
minded people. Social ties become stronger in those areas where people get along well with
their colleagues. In case of the United Kingdom, due to internationalization of the market,
several foreign labourers were working side by side along with the local labourers. This
created a disparity among the workers. As thought by many workers this internationalization
might become a threat towards their culture. The foreign workers might not value the English
culture and thus resulting in such a situation. Another important reason for voting in favour of
the Brexit is that the immigration crisis in Europe was very high. Some of the leaders of the
European Union tried to lay emphasis on the refugees. They saw this as a moral obligation.
However, the natives of the United Kingdom saw this as a threat as these refuges affected the
internal life of the nation. The refuges were taking up the jobs that should have been given to
the natives. Thus, the natives were insecure and voted in favour of the Brexit (Dennison and
Carl 2016). Another reason that may be accounted for such a voting pattern is that the
citizens of the United Kingdom have lost their trust on majority of such multinational trade,
defence and financial organisations. They believe that these organisations take the control
away from the individuals. This fear of losing control and the mistrust among the workers
were also reasons for the support of the Brexit. These are the cultural reasons as to why
Brexit was imposed in the United Kingdom.
The economic reason as to why voters choose to vote in favour of the Brexit. Most of
the local jobs in majority of the regions of the United Kingdom are significantly dependent
on the foreign economic associations or ties. However, the interesting fact is that the
labourers in various regions of the United Kingdom are openly rejecting the process of
internationalization by casting their vote against the links with the European Union. This is a
very interesting topic as to why are these workers are voting in favour of Brexit. Domestic
labourers of the United Kingdom compete with other labourers of the foreign locations. This

3CAUSES AND IMPACT OF BRIXIT ON BUSINESS AND ECONOMY
competition occurs because there are inflows of imported goods. The goods that are imported
into the local market are generally sold at a much lower price than the domestically produced
goods. This mainly occurs because of cheap labour inputs in those regions. However, many
domestically employed workers also belong to this local market producing domestic goods.
Thus the domestic employees are employed by both the local and the foreign markets. The
employees belonging to the domestic market might want to exclude the import of the cheap
foreign goods in order to reduce the competitiveness in the domestic market. Thus, it is very
clear why workers are in favour of Brexit. Thus reducing competitiveness in the domestic
market is the economic reason as to why voters decided to vote in favour of the Brexit.
There are basically two political parties in Britain namely the Labour Party and the
Conservative party. Both of the parties were in favour of remaining with the European Union.
However, many members belonging to the above parties were against this motion (Hobolt
2016). These people did not want to remain with the European Union because of the various
cultural and economic factors. These went together to form a union which raised their voice
against the European Union (Riley and Ghilès 2016). Thus, ultimately the situation was like a
three way problem. The two most renowned parties of Britain wanted to stay with the
European Union whereas the third one formed out of the two established parties opposed this
fact. The ideas of people belonging to the third group clashed with the ideas of the major
parties of Britain. In the broader sense these third party members were against the British
elite. The supporters of Brexit believed that the reckless operation of the financial sector has
created a disaster for large number of people. The financial market was incompetent too and
failed in a miserable way. The most important thing is that the voters lost their faith on the
politicians, intellectuals and the business leaders. The voters thought that these politicians,
intellectuals and the business leaders have lost their control and right to the system and they
are busy thinking about their own profits. The voters thought that the elites have become